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How the Kansas City Chiefs Paid Patrick Mahomes $500M With Only $177 In Cap Space

What history tells us about NFL Quarterbacks signing 10-year contracts

July 20, 2020

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Friends,

Patrick Mahomes has been a busy man. As if winning his first Super Bowl at 24 wasn’t enough, he’s now become the highest paid player in NFL history. Mahomes has also taken on a new role this offseason becoming the NFL’s face of social justice.

Today’s article is a newly released GQ profile on Mahomes that takes a deep dive into his Texas roots, his formula for dealing with success, and how he plans to use his platform for change. I think you’ll really enjoy this one.

Show Me The Money

So you’ve probably heard by now - Mahomes is a wealthy man. He got a massive 10-year, $450 million extension that puts him on a path to earn at least $477 million, and potentially over $500 million, between now and the end of the 2031 season, during which he’ll turn 36 years old.

Here’s a breakdown by Tom Pelissero of the yearly cash flow:

Mahomes has the ability to earn $2.5 million in incentives each year, $1.25 million for winning the AFC Championship and $1.25 million for NFL MVP honors, which would bring the deal to over $500 million in total compensation.

Rolling Guarantees

As added protection in the deal, Mahomes was given rolling guarantees (what you’ve probably heard referred to as “Guarantee Mechanisms”) throughout the life of the contract. In simple terms, a rolling guarantee essentially just requires the team to guarantee your salary one year earlier than normal. In Mahomes case, if the Chiefs don’t pick up the guarantee a year early, they would have to cut him to avoid paying out the future guarantees.

We’ve seen rolling guarantees in the NFL before with Tom Brady and Drew Brees, but never over the entire life of a 10-year extension - that’s what makes Mahomes deal unique (besides the whole 10-year, $500 million part). As you can see below, Mahomes is set to get over $63 million fully guaranteed up front, and over $100 million by next March (Source).

Here are a few examples of how the rolling guarantees work (Source):

• On the third day of the 2021 league year (that’s in March), Kansas City can cut Mahomes a check for $52.25 million to get out of the deal. If they go forward with it, an additional $40.45 million becomes fully guaranteed.

• On the third day of the 2022 league year, K.C. can pay Mahomes $70 million to get out of the deal. If they go forward, another $38 million becomes fully guaranteed.

• On the third day of the 2023 league year, K.C. can pay Mahomes $78.4 million to get out of the deal. If they go forward, another $38.9 million becomes fully guaranteed.

• If he’s on the team that March, on the third day of the 2027 league year, they’ll be paying him a $49.4 million roster bonus, separate from the $55 million guarantee, which in essence locks in a $250 million windfall over the deal’s final five seasons.

Increased Flexibility

Perhaps in exchange for rolling guarantees, Mahomes gave the Chiefs increased cap flexibility. Since his deal was signed as an extension of his rookie contract (2 years remaining) it only added $30k of cap in 2020, and decreased his 2021 cap hit by $30k. With the added flexibility the chiefs were able to sign, arguably their second best player, DT Chris Jones to a 4-year, $85 million extension.

The Chiefs now head into the 2020 season with 20 of their 22 starters returning, and their seven best players (Mahomes, Jones, Kelce, Hill, Schwartz, Mathieu, and Clark) under contract for the next two seasons.

This KC fan’s tweet perfectly sums up what Chiefs GM Brett Veach was able to accomplish this offseason:

What Does History Tell Us?

If history has anything to say, Mahomes won’t be playing in KC when 2031 comes around. Since 2000, there have been five other quarterbacks that have signed 10-year deals, not a single one of them remained with their team throughout the life of the contract (Source).

  • Played out all the years of the contract - 0

  • Won Super Bowl as starter - 0

  • Won NFL MVP - 0

  • Played 10 NFL seasons - 1

To be fair, Drew Bledsoe was 29 and Brett Favre was 31 when they signed their respective contracts. Mahomes is 24, which is more in line with Vick (24), McNabb (25), and Culpepper (26).

As unpopular as it might be, I think there is way too much uncertainty to guarantee Mahomes will be a Chief in 2031. What do you think?

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Extra Credit

The best part about Mahomes GQ cover story? The photo shoot was “virtual” with Mahomes in Dallas and the photographer in NYC.

There’s No I In Team

We need to build this community together. Tell me what you’re loving, tell me what you want to see more of. And most importantly, when your buddy asks how you know about the numbers behind Patrick Mahomes record setting deal, tell em’ about us.